On Aug 26, we issued an updated research report on Edwards Lifesciences (EW). While we are encouraged with the company’s second quarter results, which comfortably topped both the top and bottom-line estimates, we are wary about the fact that Medtronic Inc.'s (MDT) comparable offering – CoreValve has already been granted the U.S. FDA approval. The stock currently carries a Zacks Rank #2 (Hold).
Second-quarter 2014 adjusted earnings per share of 88 cents steered ahead of the Zacks Consensus Estimate by a huge 11 cents and were up 4.8% year over year. Sales of $575.1 million were up 11.2%, outpacing the Zacks Consensus Estimate of $546 million.
As expected, through the entire second quarter, Edwards Lifesciences remained in the headlines. It released positive results for the Sapien 3 transcatheter valve; launched Sapien XT in the U.S.; and more recently, received the FDA approval for its ClearSight noninvasive monitoring system. Management expects to gain substantially in its critical care product line aided by increased sales of Edwards' best-in-class monitoring technology, including the newest ClearSight system.
Currently, the company is implementing a rapid upgrade in hospitals from Sapien to Sapien XT. Management believes that with the FDA approval, the Sapien XT valve will facilitate physicians to treat a greater number of patients. So far, the Sapien family of valves has been used in the treatment of more than 70,000 patients across the globe – with the majority of them treated with Sapien XT. Sales growth across the structural heart valve therapy group was also encouraging.
However, we are wary about the earlier-than-expected FDA approval of Medtronic’s less-invasive heart valve CoreValve in Jan 2014.
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